Nike's $8 billion stock buyback passes $2.5 billion

Cash-rich Nike is ramping up purchases of its stock as it continues executing on a three-pronged capital strategy of returning money through dividends, buying back shares and investing in its business.

The strategy is Nike's way of dealing with the $6.5 billion in cash and equivalents on its balance sheet. The company also had more than $3 billion in free cash flow in its last fiscal year, an all-time high.

A quarterly financial statement filed with the Securities and Exchange Commission Monday shows Nike purchased 10.4 million shares of its stock in the recent quarter. In the three-month period, Nike purchased an increasing number of shares each month: 3.2 million in December, 3.5 million in January and 3.8 million in February.

It's now spent $2.5 billion on shares since it announced the $8 billion share buyback.

The current buyback program followed a four-year $5 billion program through Nike repurchased $4.9 billion in shares.

Investors like share buybacks because they decrease the number of outstanding shares and increase the value of those that remain on the market.

"They have been very consistent with their buyback for many years. Given the stock has appreciated so much over the last five years, the buyback program has benefited investors," said D.A. Davidson analyst Andrew Burns, in an email. "I expect this strategy to continue for the foreseeable future."